Punch it up on Google Earth, or just look out an airplane window the next time you fly into Indiana, and you’ll agree.  There’s really no such thing as an Indiana economy.  With cities and towns in two different time zones, stretching from the Ohio River to the Great Lakes, we’re really a collection of regions, many linked closely to neighboring states, not a single, cohesive, economic unit.  We don’t march to the same economic drummer, and no plan or strategy for growth will perfectly fit the needs and the assets of the various corners of the state.

But we do have a single state government, and that entity pays the bills for plenty of things that every single one of us cares about.  Parks, roads, schools, prisons and many social safety net programs – not to mention support for our local governments – all come out of state tax coffers.  All of the institutions supported by state government – state universities in particular – can only fly as high as the economic capacity of the state will allow.

That’s a message that more university leaders are getting nowadays.  Even private schools and colleges are beginning to realize that economic stagnation in the world beyond the wooded trails and elegant buildings on campus can find its way to their own door step.  But how can they make a difference? 

A new study underway in our neighbor state to the north makes a provocative and perhaps even self-serving claim.  According to two University of Michigan researchers, what goes on inside the walls of colleges and universities might matter a good deal more for the rest of the economy than any of us previously thought.  Their study suggests that presence of fast-growing, high-paying knowledge intensive jobs in any state goes hand in hand with salaries paid at the state’s universities.  With few exceptions, states that have higher than average shares of jobs in information, professional business services, finance and insurance industries also pay higher wages to their university researchers and professors.

Indiana performs quite badly on both scores.  Our 453,000 knowledge workers in 2005 ranked 46th among the 50 states and the District of Columbia as a proportion of total employment, the lowest of any medium-sized state.   That correlates with the low ranking of the $38,978 average paid to university employees statewide. 

Of course, I need to make a disclaimer.  I work for a state university.  And I’m not averse to getting more in my paycheck.  But the findings of the Michigan study don’t say that universities should start paying their current employees more money, even if they were magically given the capacity to do that.  What it does suggest is that the quality and the scope of talent and investment in higher educational institutions is an important ingredient to any strategy hoping to grow knowledge-based jobs.

In the national market for academic talent, low salaries are an obstacle for recruiting and retaining the most productive faculty and researchers, certainly.  But it is much more complex than that.  Low average salaries can also mean that our state’s university mix is tilted more heavily towards undergraduate teaching, or more towards disciplines and areas where direct competition from business and the private sector is lower.  A state with more numerous top tier research universities, emphasizing research and graduate instruction, on the other hand, could be expected to have higher pay rates, especially if fields like medicine, engineering and physical sciences are given greater emphasis.

Of course, fewer causes fall flatter at the state legislature than the call for higher salaries – for university faculty or just about any other state employee.  Yet if the Michigan study is any guide, realizing our goals for growth in life sciences or any other knowledge-based sector may prove difficult without a bigger commitment to attracting and paying talent.